Airfares continue to climb amid less competition

Passengers' costs climbed 12 percent since recession in 2009

Jan. 17, 2014

The price of flying continues to climb, with the average domestic round-trip ticket, including tax, reaching $363.42 last year, up more than $7 from the prior year. / J. David Ake / File / Associated Press

Written by

Scott Mayerowitz

Associated Press

IN NASHVILLE

Despite the rising fares, business was brisk at Nashville International Airport last year. Airport officials announced on Thursday that BNA just recorded its business calendar year ever with 10.35 million passengers. That surpassed the previous total of 10.3 million passengers in 1992.

In December, the airport reported 862,660 passengers, a 13.2 percent increase over December 2012.

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NEW YORK — The price of flying continues to climb, with the average domestic round-trip ticket, including tax, reaching $363.42 last year, up more than $7 from the previous year.

The 2 percent increase outpaced inflation, which stood at 1.5 percent for the year, and represents the fourth consecutive year fliers have faced price hikes.

Airfares have risen nearly 12 percent since the recessionary low in 2009, when adjusted for inflation, according to an Associated Press analysis of fare data from the Airlines Reporting Corp. The group processes ticket transactions for airlines and more than 9,400 travel agencies, including websites such as Expedia and Orbitz.

The price of flying has gone up as airlines have cut unprofitable routes, packed more passengers into planes and have merged with one another, providing travelers with fewer options.

Packed planes

Today, 84 percent of seats are filled with paying passengers, up from 82 percent in 2009.

“Anyone traveling today will know that those flights are full,” says Chuck Thackston, managing director of data and analytics for the Airlines Reporting Corp. “Just through supply and demand, those fares will go up.”

And none of this factors in the bevy of extra fees travelers now face for checking bags, getting extra legroom, or even purchasing a blanket, meal or pair of headphones. The typical traveler pays an additional $50 round-trip to check a single suitcase. Those fees, introduced in 2008 to offset losses from rising fuel prices, now bring in $3.4 billion a year for U.S. airlines and have helped them return consistent annual profits for the past four years.

Airlines pay just over $3 a gallon for jet fuel, up from $1.89 in 2009. An additional $2.7 billion a year is collected in reservation-change fees, with airlines charging up to $200 to revise an itinerary.

'Giving less'

“I love to travel, but they’re making it more difficult,” says Brian Kalish, a frequent flier from Arlington, Va. “Maybe I’ve been spoiled that it used to be so cheap to fly. It just feels like they are charging more and giving less.”

Airlines are able to push fare and fee hikes because there is less competition.

“You get some pricing power as a result,” says airline consultant Robert Mann.

A wave of consolidation that started in 2008 has left four U.S. airlines — American Airlines, Delta Air Lines, Southwest Airlines and United Airlines — controlling more than 80 percent of the domestic air-travel market. Discount airlines such as Allegiant Air and Spirit Airlines have grown at breakneck speed but still carry a tiny fraction of overall passengers.

“Even with the presence of a number of strong, sizable low-fare airlines, you are still seeing airfares go up sizably,” says Henry Harteveldt, a travel industry analyst with Hudson Crossing.

Starting July 1, fliers will also face higher taxes. The government’s security fee is currently $2.50 each way for a nonstop flight, capped at $5 each way if a traveler has a connection. This summer, that fee will be $5.60 each way whether or not there’s a connection. The fee hike is estimated to cost travelers an extra $1 billion a year.

Delays up

Higher fares did not mean better service.

During the first 11 months of last year, 19 percent of flights failed to arrive within 15 minutes of their scheduled time, up from 16 percent during the same period in 2012, according to data kept by the Bureau of Transportation Statistics.

The number of flights canceled in those 11 months also jumped nearly 15 percent to 81,265. The government has yet to release data for December, but the numbers won’t be pretty. A series of wintry storms led to thousands of additional delays and cancellations.